Taiwan's 3.7% IMF growth upgrade shocks S Korea

The International Monetary Fund (IMF) raised Taiwan's 2025 growth forecast.

The IMF's latest World Economic Outlook, released in mid-October, revised Taiwan's 2025 real GDP growth up by 0.8 percentage points to 3.7%. This is up from its April projection of 2.9%, a rate already higher than that of multiple East Asian economies.

The report projects that the country will outpace South Korea in per-capita GDP, a symbolic economic shift that triggered reactions across the Korean Peninsula.

The upgrade positioned Taiwan among the fastest-growing advanced economies, surpassing the IMF's 2025 global growth estimate of 3.2% in the same time frame.

In terms of the global growth estimate of 3.2%, the IMF said a series of recent trade arrangements between the United States and major economies had tempered the tariff risks once threatened by US president Donald Trump, per Reuters.


Reuters also reported the IMF assessment that recent trade agreements between the US and several major economies have helped avoid the worst of Trump’s proposed tariffs and that most countries have exercised restraint in trade policy retaliation.

The article quoted IMF Chief Economist Pierre-Olivier Gourinchas, saying that aside from the smaller-than-expected tariffs, an agile private sector that front-loaded imports and speedily rerouted supply chains, an AI investment boom, along with other factors, also contributed to the brighter global outlook.

Aside from growth, according to Focus Taiwan, the IMF report forecast Taiwan's consumer price inflation at 1.7% in 2025 and 1.6% in 2026, with unemployment at 3.4% in both years. 

However, there are caveats to Taiwan's positive growth outlook. Compared with the IMF's upward adjustment in Taiwan's 2025 growth forecast, the 2026 growth outlook of Taiwan was revised downward to 2.1% from the original 2.5%. In contrast, the 2026 global growth estimate leveled off at 3.1%.

South Korea is watching 

South Korean news outlet The Chosun Daily reported that with the October 2025 IMF projection revision, South Korea would fall to 37th in terms of per capita gross domestic product (per capita GDP), and that Taiwan would rise to 35th, surpassing South Korea for the first time in 22 years. The report attributed Taiwan's upward-trending economy to strong exports of AI and semiconductors.

The report noted IMF projections that Taiwan would surpass the per capita GDP threshold of US$40,000 next year, in 2026, two years ahead of South Korea, which the IMF projects will hit the same goal in 2028. The report also cited IMF projections that by 2030, Taiwan’s per capita GDP will reach US$50,252, compared with South Korea’s US$44,262.

The Chosun Daily Korean outlet published another report in late October, stating that in terms of purchasing power parity (PPP), South Koreans perceive their per capita GDP level in daily life to be approximately $20,000 lower than that of Taiwan's annually.

The term PPP is designed to gauge living standards across economies by accounting for the differences in domestic price levels and cost of living. Countries with lower prices often record comparatively higher PPP figures, as each unit of local currency stretches further in real terms. 

The report said that Taiwan's higher PPP was a result of the country's relatively stable inflation rate.


Korean economic news outlet Aju Press saw the latest IMF report as a sign that South Korea could see its economic lead over Taiwan slip away in 2025. It stated that although the two high-tech nations were once considered export-driven industrial peers, Korea's more uneven growth due to weak consumption and sluggish property market has been overtaken by that of Taiwan's, which has seen a booming semiconductor industry and diversified export base in recent years.

The article cited the IMF's projections that Korea's per capita GDP would further slide in the ensuing years.

Business Korea reported that Taiwan's per capita GDP increased while South Korea's decreased.

The IMF projections point to a shift in East Asia’s economic landscape, with Taiwan gaining ground as South Korea’s growth slows.